Question

In: Accounting

Ocean Fishers Ltd had a 22-foot fishing boat with an inboard motor that was purchased on...

Ocean Fishers Ltd had a 22-foot fishing boat with an inboard motor that was purchased on April 9, 2009, for $99,000. The PPE Sub ledger shows the following information regarding the boat:

  Fishing Boat – 22 Foot With Inboard Motor:
  Component Date of Purchase Deprec.
Method		   Cost Est.
Residual		 Est.Life
  Fibreglass body Apr. 9/09 SL $ 33,000 $ 6,000 15 yr
  Motor Apr. 9/09 SL 66,000       -0- 10 yr
$ 99,000


On June 27, 2017, $72,000 cash was paid for a new motor to replace the old one, which was scrapped. The new motor had an estimated useful life of 12 years and a residual value of $6,000. Early in 2017, it was determined that the useful life of the boat's fibreglass body should be adjusted to a total of 20 years with no change in the residual value.

Required:
1. Record the appropriate entries regarding the

a. Purchase of the replacement motor on June 27, 2017. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

Solutions

Expert Solution

Please find following journal entries and working note for your reference.

ekkarill92 answered 1 year ago
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